Report: Bad Nursing Homes Get Billions in Federal Loan Breaks

Before 1965, owning and operating a nursing home was seen as risky business. That’s because prior to then, there was no Medicaid, meaning families had to subsidize the care of infirm, elderly loved ones on their own. That meant there was no guarantee these centers would be consistently paid. abuela.jpg

It was in this climate legislators passed a measure that would make it easier for nursing homes to get decent rates on loans for everything from new construction to remodeling to obtaining equipment. This program, under the National Housing Act of 1959, allowed for reduced interest rates on loans that were federally-guaranteed by the Department of Housing and Urban Development.

Today, the nursing home industry is booming, with for-profit centers accounting for a growing percentage of the market share. Even though there is little need to continue offering the reduced, federally-backed interest rates to these centers, the program persists. But what’s worse, according to a recent investigation by The Center for Public Integrity, nursing homes that received an abysmal one-star federal rating for care quality apparently have no problem securing these advantageous rates – even when those poor ratings persist for years.

Our Charlotte nursing home abuse lawyers know that a one-star rating is indicative of egregious violations of patient care quality. It means patients have been placed at risk of serious harm – or sometimes suffered serious harm and even death – as a result of this negligent care. Yet, they continue to reap taxpayer-funded rewards.

Between 2009 and 2012 investigators learned 240 one-star-rated nursing homes collectively received $2.5 billion in low interest, HUD-backed mortgages.

It’s not as if the government isn’t aware of this problem, either. For the last two decades, there have been scathing reports issued by both HUD’s Office of the Inspector General and the Government Accountability Office. For example, a 2011 HUD inspector general report was critical of the low priority officials placed on regulatory enforcement of care quality.

Additionally, reports indicated these poorly-rated facilities are far more likely to default, leaving taxpayers stuck with the bill. Federal regulators report hundreds of millions of dollars in taxpayer money has been lost over the years.

For-profit corporations were reportedly overrepresented. Although they owned slightly more than half of all nursing homes, they held more than two-thirds of poorly-rated, HUD-guaranteed mortgages.

Again, not only are these for-profit centers receiving government aid for purposes obsolete, these are facilities where it has been proven patients were seriously neglected, beaten and sexually abused.

These centers are often fined for their misdeeds, but they are then rewarded with these low rates. For example, one nursing home facility in Illinois was fined $360,000 after the state investigated six suspicious deaths there. And yet, just five years later, the center received a $4.4 million federally-backed loan with an interest rate of just 2.86 percent. At the time it received the loan, the center still had a one-star rating.

Such benefits give negligent nursing homes little incentive to change their ways and make patient care a low priority.

Contact the North Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.

Additional Resources:
Poorly rated nursing homes got HUD-guaranteed mortgages anyway, Nov. 13, 2014, By Jeff Kelly Lowenstein, The Center for Public Integrity

More Blog Entries:
77-Year-Old Woman Killed in Tragic Swamp Boating Accident, Oct. 30, 2014, Charlotte Nursing Home Abuse Lawyer Blog

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